The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has issued Directive 2018-2, which extends the moratorium on its enforcement of affirmative obligations for subcontractors under TRICARE, the health care program of the United States Department of Defense that provides medical benefits to active duty and retired military personnel and their families.

The moratorium, now set to expire on May 7, 2021, covers obligations including those related to affirmative action programs and recordkeeping required of TRICARE subcontractors under Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974. These laws make it illegal for contractors and subcontractors doing business with the federal government to discriminate in employment because of race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran or to discriminate against applicants or employees because they have inquired about, discussed, or disclosed their compensation or the compensation of others.

The moratorium does not apply to the investigation of discrimination complaints, or to any obligations a TRICARE subcontractor may have under other federal nondiscrimination laws, including Title VII of the Civil Rights Act of 1964, as amended (42 U.S.C. 2000e et seq.) and the Americans with Disabilities Act of 1990, as amended (42 U.S.C. 12101 et seq.).

The moratorium applies to all healthcare providers that participate in TRICARE through a subcontract with one of the direct contractors that administer the TRICARE program. The OFCCp has also amended the moratorium  to include Veterans Affairs Health Benefits Program providers (both contractors and subcontractors). This moratorium does not apply to healthcare providers holding separate, independent, non–health care–related federal contracts or subcontracts. In addition, this moratorium does not affect Medicaid and Medicare healthcare providers, which are not considered contractors or subcontractors subject to OFCCP’s jurisdiction.

The question of who is a covered subcontractor under the laws enforced by OFCCP, and specifically whether OFCCP has jurisdiction over TRICARE participants, has been hotly contested in the past. In fact, Congress enacted legislation for the express purpose of excluding such managed-care contracts from the definition of federal contracts (10 U.S.C. § 1097b(a)(3) (2012)). Nonetheless, the Department of Labor has continued to assert jurisdiction, and it is unclear if the extended moratorium will serve to provide it more time to reconsider its position or simply to postpone the OFCCP’s assertion of jurisdiction over TRICARE providers.

For more information on the OFCCP’s Directive 2018-2 and how it might affect your business, please contact:

• Joanne J. Romero
• Kristin Klein Wheaton
• Caroline J. Berdzik
• Or any member of the Employment and Labor Practice Group